U.S. retailers lose over $100 million each year due to payment fraud, according to a 2011 LexisNexis Risk Solutions white paper. The same study found that merchants "incur $2.70 in costs for each $1 of fraud."
Fortunately for retail small businesses, there are two simple tools you can use to minimize your exposure. Here's a look at counterfeit currency pens and credit card readers.
The increasing sophistication of printers and computer imaging technology has made currency fraud easier and easier. These days, someone can simply access a high-resolution printer, source plausible paper stock and then mock up a passable $20 or $100 bill.
But here's the catch: Real currency is printed on cotton-based paper, not traditional wood pulp stock. Cotton stock is much harder to find and often prohibitively expensive for hobbyists, which is why most casual currency counterfeiters use ordinary paper.
The counterfeit pen uses an iodine solution that can quickly distinguish one paper type from another with a mark: Yellow or invisible means the bill is good, while a black mark means it's a fake. Train your employees to check every $20 bill and higher with a quick stroke, and you may prevent thousands of dollars in losses each year.
Another way to close off a popular avenue of fraud is to invest in credit card processing. Most credit accounts can be checked instantly against bank records. And though sophisticated hackers still clone credit cards in bulk, many small-time criminals lack the technical knowledge to pull off this sort of scam.
Investing in a credit card reader is an easy hedge against payment fraud. Most credit cards are tied to names, addresses and active accounts, making it far easier to track and punish crooks who try to steal from you. Ask for photo ID with every credit payment and prominently feature signage stating your policy. Verify signatures to close any loopholes associated with stolen cards.
Of course, these two tools are just a start for protecting your business. More elaborate measures for fraud prevention can include a fully integrated security system that helps retailers with fraud tracking and monitoring. But with just a counterfeit currency pen and a credit card reader, you can start to cut down on the most common cases of payment fraud.